Bonds Without Borders

category. “I like the way these funds spread the risk among different countries and different types of issuers,” she says. “The managers have experience in this asset class, too.”

Emerging markets bond funds have enjoyed six straight years of double-digit gains, from 1999 to 2004. But before the streak began, the category lost 22% in 1998, so there may be down years in the future. “After an extended rally,” says Dutta, “investors should be doubly cautious.”